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01 September 2011
Madam:
This refers to your letter dated 24 January 2011 addressed to Director Benito
A. Cataran of the Commission's Company Registration and Monitoring Department
('CRMD'j. Said letter was endorsed to the Office of the General Counsel on 07
February 2011.
To answer your first question, we must first look into what kind of a
corporation Hodong is, since this would determine whether it is a corporation
engaged in an activity where foreign ownership is restricted under Philippine laws.
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Article XII, Section 2 of the Constitution provides that:
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"Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control and supervision
of the State. The State may directly undertake such activities, or it may enter
into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of
whose capital is owned by such citizens. xxx"
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elected or appointed to management positions as president, vice-president,
treasurer, secretary, etc. in business activities where there is a
constitutional or statutory provision imposing a specific nationality
requirement as a requisite for the exercise or enjoyment of a right,
franchise or privilege,'rS (Emphasis supplied.)
xxx
In arriving at this conclusion, I am guided by the underlying intent
behind the nationalization of employment provided for in the Anti-Dummy
Law, which is to eradicate the shackles of foreign economic control and
domination in the country." [King vs. Hernaez, supra, at p. 804; Universal
Corn Products, Inc. vs. Rice and Corn Board, 20 SCRA1048 (1967).]'16
As to your second and third questions, you may file a complaint with the
Enforcement and Prosecution Department ('EPD'? of the Commission, which shall
conduct an investigation into the matter. Based on the results of such investigation,
the Commission may impose sanctions for violation of the laws and rules, and may
recommend the filing of criminal complaints.
provisions of this section shall be criminally liable in lieu thereof: Provided, further, That any person,
corporation or association shall, in addition to the penalty imposed herein, forfeit such right,
franchise, privilege, and the property or business enjoyed or acquired in violation of the provisions of
this Act: And provided, finally, That the election of aliens as members of the board of directors or
governing body of corporations or associations engaging in partially nationalized activities shall be
allowed in proportion to their allowable participation or share in the capital of such entities."
(Emphasis supplied.)
5 SECOpinion addressed to Mr. K. J. Mctavish dated December 8, 1995.
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6 DOJ Opinion No. 037, s. 1976, 2 Indorsement, February 26, 1976.
7 Batas Pambansa Big. 68 (May 1, 1980).
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4. The Foreign Investments Act9, the law from which the Foreign
Investment Negative List emanates, provides that:
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"Violations of any of the provIsions of this Code or its
amendments not otherwise specifically penalized therein shall
be punished by a fine of not less than one thousand
(Pl,OOO.OO) pesos but not more than ten thousand
(Pl0,OOO.00) pesos or by imprisonment for not less than thirty
(30) days but not more than five (5) years, or both, in the
discretio'n of the court. If the violation is committed by a
corporation, the same may, after notice and hearing, be
dissolved in appropriate proceedings before the Securities and
Exchange Commission: Provided, That such dissolution shall
not preclude the institution of appropriate action against the
director, trustee or officer of the corporation responsible for
said violation: Provided, further, That nothing in this section
shall be construed to repeal the other causes for dissolution of
a corporation provided in this Code."
However, please note that criminal matters are referred to the DOJ, as it is
the Secretary of Justice who is tasked by law to investigate and prosecute all
violations of penal laws, including violations of the Anti-Dummy Law."ll Also, if the
issues are intracorporate, it is the Regional Trial Courts that have jurisdiction, based
on Section 5.2 of the SRC.
This Opinion is based solely on the facts disclosed in the query and relevant
solely to the particular issues raised therein. It shall likewise be understood that the
foregoing shall not be used in the nature of a standing rule binding upon the
Commission in other cases or upon the courts. If, upon investigation, it will be
disclosed that the facts relied upon are different, this opinion shall be rendered void.
B. GARCIA
harge
10 SEC Opinion dated January 19, 1996, addressed to Hon. Mohd A. Omar Fajardo.
11 Pp. VS. Gacott, et at. G.R. No. 116049, March 20, 1995.
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